Pushpay FY16 Results Announcement

Pushpay FY16 Results Announcement

Auckland, New Zealand | Redmond, Washington, USA – 18 May 2016

Pushpay Holdings Limited (NZSX:PAY) (‘Pushpay’ or ‘the Company’) is pleased to present its financial results for the year ended 31 March 2016 and its 2016 Annual Report.

Chris Heaslip, CEO and Co-founder said, “Pushpay has continued to deliver phenomenal growth coupled with exemplary SaaS metrics as it executes on its strategic growth plan in the USA faith sector. Pushpay has increased its leading metric, Annualised Committed Monthly Revenue (ACMR), by a staggering $23.75 million to $29.08 million over the year to 31 March 2016, an increase of 445.59%. This growth was achieved whilst maintaining best of breed efficiency metrics, including a greater than 95% Annual Revenue Retention Rate and less than 12 Months to Recover the Customer Acquisition Cost (CAC). Revenue from continuing operations increased by $13.13 million to $14.97 million over the year to 31 March 2016, an increase of 713.42%. Pushpay’s net loss increased by $11.92 million to $19.40 million, an increase of 159.36% as Pushpay continues to invest in scaling its business.”

Throughout the year to 31 March 2016, Pushpay has remained focused on gaining market share in the USA faith sector, delivering on our targets and continuing to invest in our people, product and processes. The Company now has over 1% of the USA faith sector, including four of the top 10 largest churches in the USA1 and has quickly become the dominant player in the market, which consists of over 314,000 churches with an average size of over 500 attendees.2

Pushpay now expects to reach its $100 million ACMR target prior to the end of February 2018, six months sooner than previously anticipated. While Pushpay believes that it is preferable to focus on and invest in growth as the best means to achieve overall value in its business, we are also conscious of the importance of reaching cash flow breakeven. As we continue to invest in scaling the business our current business plan implies the business reaching breakeven on a monthly cash flow basis in calendar year 2017.

Our clear growth strategy, investment in people, product and processes combined with the large under-serviced target market of the USA faith sector has driven our success to date.

Annualised Committed Monthly Revenue (ACMR)

The Company increased ACMR by $23.75 million to $29.08 million over the year to 31 March 2016, an increase of 445.59%. Pushpay is pleased to have exceeded its target to increase ACMR by over 100% to $28.00 million in the six months to 31 March 2016.

Pushpay continues to make rapid and targeted progress in the USA faith sector and expects to reach its $100 million ACMR target prior to the end of February 2018, based on further development of its product, direct sales, referrals strategy and through targeting Merchants that have existing relationships with Pushpay’s strategic channel partners and other distribution partners.

We continue to refine our growth strategy, focusing on attracting larger Merchants which have the resources to maximise implementation, which in turn increases engagement and leads to higher retention. To complement this, Pushpay is investing in a more targeted marketing strategy, shifting away from transactional sales techniques towards relational sales techniques.

Attracting a higher number of larger Merchants will increase our ACMR growth while also increasing our Annual Revenue Retention Rate over time.

If we see opportunities to further refine our growth strategy to attain the $100 million ACMR target sooner, we will position ourselves to take advantage of those opportunities.

1 Outreach Magazine (2015). The Largest Churches 2015 2 US Census Bureau (2012). Statistical Abstract of the United States: 20122

Recently, there has been a shift in technology investors’ expectations, which has been reflected in valuations globally. Growth for growth’s sake is no longer acceptable, with technology companies being punished by the market for “sloppy” growth.3 At Pushpay, we are proud to have sustainable, smart growth evidenced by our sales efficiency, best in class retention and commitment to reach breakeven on a monthly cash flow basis in calendar year 2017.

Pushpay’s Merchant numbers

Pushpay increased its customer base by 2,770 Merchants to 3,766 Merchants, an increase of 278.11% over the year to 31 March 2016. Pushpay is proud to service over 1% of the estimated USA faith sector, which consists of over 314,000 churches with an average size of over 500 attendees.4

As at 31 March 2016, 95% of Merchants are located in North America, which covers the USA and Canada, with the remaining 5% located in Australasia, which covers New Zealand and Australia. This illustrates Pushpay’s ability to attract Merchants from all over the USA and Canada, suggesting the business model is not location specific.

Additionally, four of the top 10 largest churches in the USA5 have chosen to use Pushpay, the largest of which has over 34,000 attendees. The confidence and support of large Merchants such as these, demonstrates that Pushpay’s payment solutions are well-understood by the USA faith sector.

USA faith sector revenue opportunity

There is a very large revenue opportunity in the USA faith sector that Pushpay estimates to be around US$1.614 billion, assuming 30% of digital giving based on US$114.90 billion total giving to religious organisations in 2014.6

Average Revenue Per Merchant (ARPM)

In New Zealand Dollars (NZD), ARPM increased by NZD$152 per month to NZD$643 per month, an increase of 30.96% over the year to 31 March 2016. In United States Dollars (USD), ARPM increased by USD$67 per month to USD$434 per month, an increase of 18.26% over the year to 31 March 2016.

People, product and processes

Pushpay’s success to date in the USA faith sector is a testament to the continuous investment in its people, product and processes. Pushpay has an extremely dedicated, high-quality team of professionals with true conviction in the work that they do at Pushpay. Pushpay continues to nurture and invest in its team of professionals, having increased staff headcount by 147 to 215, an increase of 216.18% over the year to 31 March 2016. Around half of the new hires were in sales and marketing related roles.

Shane Sampson joined Pushpay as Chief Financial Officer in October 2015, following an international search that generated extensive interest in the position. Shane’s strong commercial acumen and broad strategic outlook have made him a valuable and crucial addition to our senior management team.

Peter Huljich has been appointed to an executive role as Head of Corporate Development, to provide internal planning, project management and execution resource for significant projects. Due to his new executive role, Peter has resigned as an alternate director for Christopher Huljich. Christopher Huljich remains a director of Pushpay.

At Pushpay, we strive for continuous improvement in our processes. Internally, across all positions and

3 TechCrunch (2016). Tech Valuations In 2016: The End Of The Line For Sloppy Growth 4 US Census Bureau (2012). Statistical Abstract of the United States: 2012 5 Outreach Magazine (2015). The Largest Churches 2015 6 Giving USA (2015). Giving USA 2015: Annual report on philanthropy for the year 2014

USD. This accounting policy change is allowed under the relevant financial reporting standard, NZ IAS 21, and is being made to assist users of the financial statements to assess the performance of the business, by reducing the impact of exchange rate movements on reported financial results and key metrics.

Pushpay is a New Zealand company listed on the NZX Main Board operated by NZX Limited and has historically presented its financial statements and key metrics in NZD. Rapid growth of the Company’s USA Merchant base means that most revenue is now denominated in USD and the majority of costs are also in USD. In addition, Pushpay sold the Run The Red business on 31 March 2016. Run The Red comprised most of the group’s non-USD denominated revenues and the sale of that business means the proportion of non- USD denominated revenues and expenses will fall further from 1 April 2016.

The 31 March 2016 consolidated financial statements are presented in NZD for consistency with prior periods and the 30 September 2016 Interim Report will be the first of Pushpay’s financial statements to be presented in USD.

For announcements to the market and reports to shareholders in relation to periods commencing on or after 1 April 2016 which include comparable financial information previously reported in a currency other than USD, the comparable financial information will be restated to USD. Consistent with the requirements of NZ IAS 8, the first set of financial statements after the change in accounting policy will also include information on the effects of the policy change on the financial statements.

Capital and ASX Listing

Pushpay ended the year with Cash and Available Funding Lines of $16.16 million, an increase of $11.84 million or 274.07% over the year to 31 March 2016.

Pushpay was well supported over the period by existing and new shareholders including Directors Bruce Gordon, Graham Shaw, Christopher Huljich, Peter Huljich (Alternate Director for Christopher Huljich - resigned 17 May 2016), a number of staff and Pie Funds Management – a top performing boutique fund manager.

Pushpay secured funding throughout the year from a number of sources including a Research and Development (R&D) Project Grant in June 2015 from Callaghan Innovation with a total possible allocation of $0.96 million. In addition, Pushpay successfully raised $13.78 million in June 2015 through a fully underwritten Entitlement Offer and just months following, raised a further $18.82 million in October 2015 through a Private Placement. Pushpay also sold its SMS gateway business, Run The Red, to Modica Group for an aggregate value of $4.50 million in March 2016.

Funds raised over the period will continue to provide Pushpay with the funding to further develop our product offering and as working capital to accelerate growth in international markets, focusing on our key target territory – the USA.

The Board believes it prudent to prepare for future funding requirements and, accordingly, is in discussions with a number of USA-based venture capital firms who the Board believes have the potential to add significant value to Pushpay. In parallel, Pushpay is exploring a number of other capital raising opportunities with investment banks based in both Australia and the USA. The Board currently expects that in excess of $30 million is likely to be raised within the next four months. Pushpay has also had preliminary discussions with ASX about a potential ASX listing and, subject to satisfying ASX’s listing criteria, the Board’s current intention is to seek an ASX listing within the next six months.

Migration and share split

Pushpay migrated to the NZX Main Board on 9 June 2015 having ceased quotation of its shares on the NZX Alternative Market on 8 June 2015. This marked a significant milestone for Pushpay.

Pushpay completed a 4:1 share split on 8 February 2016. After the share split, Pushpay shareholders held four fully paid ordinary shares for each fully paid ordinary share held by them at 5:00 pm on the record date of 5 February 2016.

Following the migration and share split, Pushpay has seen increased liquidity, shareholder numbers and exposure in the investment community.

Outlook

The year to 31 March 2016 was exciting and successful and we are proud of the progress Pushpay has made. We are in a prime position to execute on our growth strategy and continue to work towards our target of reaching $100 million of ACMR prior to the end of February 2018, six months earlier than previously forecast.

Bruce Gordon, Chairman said, “The board is pleased with the financial result and while Pushpay believes that it is preferable to focus on and invest in growth as the best means to achieve overall value in its business, we are also conscious of the importance of reaching cash flow breakeven. As we continue to invest in scaling the business our current business plan implies the business reaching breakeven on a monthly cash flow basis in calendar year 2017.”

Chris Heaslip said, “Pushpay continues to deliver on its growth plan in the USA faith sector with the direction of the board and management’s successful execution. On behalf of the board and management, we would like to thank our dedicated staff for their expertise and hard work, our Merchants for choosing to partner with us, and you, our shareholders for your continued confidence and support.”

ENDS

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